- the investor's required rate of return is 15 percent, - the expected level of earnings at the end of this year (E1) is $5, - the retention ratio is 50 percent, - the return on equity (ROE) is 20 percent (that is, it can earn 20 percent on reinvested earnings), and - similar shares of stock sell at multiples of 10.000 times earnings per share. Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (P/E1). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? e. What would happen to the P/E ratio (P/E1) and sto'ck price if the firm could earn 25 percent on reinvested earnings (ROE) ? f. What does this tell you about the relationship between the rate the firm can earn on reinvested earnings and P/E ratios? a. What is the expected growth rate for dividends